What is Bankruptcy?
Bankruptcy is a legal status in which an individual, business, or organization is unable to pay their outstanding debts to creditors. This occurs when the debtor has accumulated too much debt and can no longer meet repayment obligations. Bankruptcy may be voluntary or involuntary and when this occurs, all assets owned by the debtor become a part of the bankruptcy estate.
Difference between insolvency and bankruptcy
Insolvency and bankruptcy are both terms used to describe a person or business’s financial state. The main difference between them is that insolvency is a situation in which an individual or organization cannot pay the debts they owe, while bankruptcy is a legal declaration declaring someone legally insolvent.
Voluntary bankruptcy proceedings are conducted as per:
Voluntary bankruptcy proceedings are conducted as per the provisions of the Bankruptcy Code. Under voluntary bankruptcy proceedings, individuals or businesses can initiate their own bankruptcy filing without the need for court intervention. The debtor must first file a petition in the appropriate court, usually along with other supporting documents such as financial statements and tax returns.